Regardless of the outcome at the Paris climate talks this weekend, Indian businesses are prepared to lead the country’s renewable power and energy efficiency push, said companies from the subcontinent on Friday.
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Speaking at a panel discussion on how India is addressing climate change at the sidelines of the UN climate conference in Paris, business leaders said that the country’s private sector is rapidly scaling up its renewable and energy efficiency ambition without waiting for a global climate deal or financial support from rich countries.
Anirban Ghosh, vice-president of sustainability at multinational automobile manufacturer Mahindra & Mahindra, noted that “in the area of energy efficiency, we don’t need a climate agreement to help us at all, because the business case for it is very strong”.
For example, Mahindra has installed heat recovery technology in all its factories, and over the past three years has embarked on more than 300 projects to reuse the heat from its operations to warm up water, use the steam to generate energy, and for other purposes.
These projects have had a payback period of less than two years, and the return on investment has been more than 24 per cent, shared Ghosh.
“Many big corporations don’t even get returns like this on new products they launch,” he added. “This is what we are trying to leverage through energy efficiency”.
Technologies which consume less energy - and can therefore be powered by small, off-grid renewable energy sources - have also helped scale up low-carbon energy across India, where the International Energy Agency estimates that 237 million people still live without access to electricity today, said Ghosh.
“It would be near impossible to power an incandescent light bulb with off-grid renewable energy,” he explained. “But solar or wind energy can be used to power LED (light emitting diode) lights, which are much more energy efficient.”
While energy efficient products have helped the spread of renewable energy in the country, the government’s ambitious targets to scale up renewable energy are also driving the rapid expansion of the sector, said panellists.
In March this year, India committed to increasing its renewable energy capacity to 175 gigawatts (GW) by 2022, four times its 34 GW capacity recorded in February. About 100 GW of this would come from solar, with wind, biomass, and small hydro power making up the remainder.
On November 30, the first day of the Paris climate talks, Prime Minister Narendra Modi also unveiled a global solar alliance, a group of more than 100 tropical countries which will share know-how on solar technology and policy formulation.
Experts praised this initiative, unveiled in the presence of French president Francois Hollande and United Nations Secretary-General Ban Ki-moon, as a constructive contribution by India to the climate talks.
These recent announcements “have completely shaken up the ambition” of the renewable energy sector in India, said Anurabha Ghosh, chief executive officer of Indian think-tank Centre for Energy, Environment and Water (CEEW).
For example, the country’s central bank has classified renewable energy companies as high-priority firms for lending, he shared.
Developers have been expanding their operations aggressively, and the increase in supply of renewable power has pushed the cost of solar energy down from about 56 rupees (76 euro cents) per kilowatt-hour, in 2010 to about 4 rupees today, noted Dr Ghosh.
There are also more than 400 solar start-ups around the country today, he added. Most of them are focused on decentralised renewable energy, a key means of delivering electricity to communities that are not yet connected to the grid.
Obstacles to adoption
But while industry is optimistic about growth opportunities in India’s renewable sector, the government sector faces challenges when it comes to the achieving nationwide adoption of renewables, and meeting its clean energy and emissions reduction targets.
V. Subramanian, secretary-general of the Indian Wind Energy Association and a former government official, explained that under India’s governance structure, state governments have autonomy over energy-related decisions.
This means the federal government has to work hard to persuade them to adopt renewables.
But Subramaniam was optimistic because “no political party is fundamentally opposed to renewables or energy efficiency,” though they may have differing views on the extent and speed of renewable energy adoption.
Experts said that India also lacks the resources to invest in groundbreaking energy efficiency and renewables research.
Nitin Pandit, executive director, World Resources Institute India, claimedthat many of the technologies that will deliver huge emissions cuts have not been invented yet, let alone deployed at a large scale.
So in order for the government to fulfil the pledges it submitted to the United Nations before the start of the climate talks, India will need international financing support to innovate and roll out new clean technologies, he added.
In the country’s Intended Nationally Determined Contribution, or INDC, India said it would reduce its carbon dioxide output per unit of national income by up to 35 per cent by 2030 from 2005 levels, and by the same year increase the share of clean energy to 40 per cent of its energy mix.
But, it had a clause that the pledge would only be completely fulfilled if it received international funds to support mitigation and adaptation efforts.
“To develop and employ the latest clean energy technology, we need to tap on every source of finance we can get,” said Pandit.
Another challenge to India’s emissions reductions ambitions is the predominance of coal in its energy mix.
For example, at the same time that the Modi government unveiled its renewable energy target, it also announced five new “ultra-mega” coal power plants, which would have a generation capacity of 4 gigawatts each.
CEEW’s Ghosh acknowledged that “we can’t displace coal overnight, but the aggression in renewable targets is to slow down investments in the fossil fuel sector”.
Without the national target of 175 GW, renewables would only account for eight per cent of India’s energy mix by 2040, he added. But with this target, clean energy is set to make up “at least” 30 per cent of electricity generation.
“We are trying to do in about 10 years what took Germany 21 years to achieve,” he said, referring to the country’s renewable energy target. The country is not counting large hydropower projects into its renewable energy targets, he shared.
This is because the government does not see this power source as suitable for widespread adoption due to concerns related to land use and the impact on communities, he said.
He compared this to countries like China, which rely heavily on big dams to meet its clean energy targets.
”When we think of sustainability, we consider not only carbon emissions, but also land and water use, and the integrated manaagement of resources,” he said. “India’s renewable energy targets are not just aggressive, but disproportionately so compared to other countries.”
